Cracking the code
on profitable online
acquisitions with
the empowered
consumer
An Experian perspective
Today’s marketing conversations are dominated by technology, and
it’s no different in the financial services sector. It’s the challenge of
keeping up with consumer preferences and the quantum leaps they
have taken in online engagement.
Clearly, financial institutions (FIs) understand the
significance of the increase in consumer engagement
in online banking. Sixty-eight percent of Internet users
utilize online banking, and the numbers are only going to
keep growing. The financial services industry is migrating
advertising budgets to the digital sphere, with spending
expected to increase 43 percent from 2012 to 2016 to
$6.8 billion.1
Ipsos 2Q 2012 Mail Monitor Acquisition Report
1
THE CHALLENGES TO
PROSPECTING ONLINE
T
43%
Financial services
online ad spend
$4.7B $6.8B
2012
2016
the marketplace at turbo speed. And the intense
attachment consumers have toward their
phones, perceiving them as extensions of their
psyche, has lenders running to play catch-up in
the mobile space as well. Most importantly, the
proliferation of channels and the explosion of
social media have given the consumer a loud
and influential voice.
here is continuing ambiguity around the
effectiveness of online prospecting and
acquisitions efforts. What’s the most effective
allocation of digital marketing dollars? How can
an FI optimize ad spend and crack the elusive
code to reach online prospects who will make
it through a prime approval process? Or up-sell
current customers into more lines of business? Is
it possible to increase approval rates and provide
a positive customer experience for those who
ultimately must be declined? These are just some
of the struggles financial services marketers
encounter daily in the burgeoning digital world.
Combined with the reality of $200 cost per
acquisitions (CPAs) and 7 percent approval
rates, these challenges are compounded by
matrixed organizational structures, lack of
resources, and the overwhelming number of
new tools, technologies and agencies entering
1
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EMBRACING THE
EMPOWERED CONSUMER
R
emember the age-old saying: “If your friends
jumped off a cliff, would you?” One of many
quotes in a parent’s quest to deter us from peer
influence, and raise us as individual thinkers
instead of followers. But today’s increasingly
connected consumer, accepts recommendations
from complete strangers. Reviews, likes, shares,
stars and, yes, even followers can have Super
Bowl TV commercial–like reach and impressions.
THE ELUSIVE CHALLENGE
OF PERSONALIZING
ONLINE OFFERS
This consumer voice and their sea of connections
make them feel more empowered than ever
before. Lenders who embrace this change and
give consumers ways to exercise that power will
be the industry leaders in this new era.
E
But the future of online prospecting best
practices is not just about addressing the
growing use of technology or capitalizing on
consumers’ connectivity. It’s simply about
winning them over by engaging with them
on their own terms. When we’re able to
anticipate behavior and preferences, we
have the opportunity to delight consumers
in a remarkable way — one they’ll want to
tell their friends and followers about.
the driver’s seat.
ngaging consumers on their own
terms means personalization. Consumers love
personalization. In many online and offline venues, they
continually seek to become more heterogeneous. They
expect custom, tailored offers. They expect to be put in
But financial services marketers face a unique problem
in the online ad space. Since behavioral targeting based
on click stream activities isn’t a sufficient predictor for
the approvals process, generating personalized offers
has been a challenge. Display ads just haven’t worked
in financial services. No matter how well-researched the
ad placements, interactions beyond the initial click are
a scattershot for both the institution and the consumer,
leading to low ROI and high CPAs.
And low approval rates are unacceptable on their own,
but in this social environment it’s even more painful
to acknowledge that some shoppers are walking away
empty-handed, often with negative feelings toward
your brand.
“Lenders who give
consumers ways to
exercise their power will
be the industry leaders
in this new era.”
Marketing leaders in the industry have been seeking
innovations to solve this problem. How do you
gain greater visibility throughout the entire online
acquisitions process? How do you tailor offers for
individuals to optimize ad spend and reduce CPAs while
creating a positive experience for everyone who clicks?
How do you employ risk/targeting models to maximize
profitability? And all of this without dropping reach?
2
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GAME CHANGING
INNOVATION: CREDIT
SCREENING IN ONLINE ADS
E
Consenting
shoppers can click
through to highly
personalized offers.
nabling consumer empowerment is
the next evolution of online advertising.
The integration of credit screening into
online marketing banners is key to promoting
engagement and consumer empowerment.
Credit screening can be embedded within
the banner, providing a consumer with the
power to tell a lender he or she is interested in
seeing personalized credit options. This type of
consumer-driven permission provides a lender
with the ability to present credit options to
some and noncredit options to others, leading
customers later with a credit product. Lenders
also may opt for a credit education strategy,
seeding a partnership for a future credit product.
to a positive shopping experience for all.
This is not a prescreen; it’s a prequalification of a
consumer’s creditworthiness that allows lenders
to present credit options the shopper is most
likely to qualify for without posting a hard inquiry2
on a credit report. If the consumer doesn’t qualify
for any existing credit products, the lender may
provide an alternative option of opening a savings
or checking account or offer another secured/
prepaid product. This way, the consumer never
needs to experience a flat decline, softening
the customer experience and engaging new
customers with a noncredit offer. Lenders then
can choose to market to their new, noncredit
This strategy is centered on consumer
empowerment to address the high CPAs
associated with sourcing accounts from the
online channel. Historically, CPAs have exceeded
$200 due to the adverse selection factor
associated with prospects from this channel.
But, with the addition of a credit screening
process embedded into banner ads, consumers
who do not meet your credit criteria can be
redirected to noncredit offers and, therefore, are
not funneled through the full application process.
Hard inquiry: when a person or organization requests your credit score and history, and they intend to make a lending decision/firm offer of credit.
2
Enabling consumer
empowerment is the
next evolution of
online advertising
3
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EVERYONE WINS WITH
CONSUMER CONSENT-BASED
PERSONALIZATION
N
PUT THE CUSTOM
ER
Nonc
redit
optio
ns
obody likes rejection, and this strategy
IN THE DRIVER’S SE
AT
Credit options
ensures that the consumer never walks away
empty-handed. The soft inquiry of consent-based
prequalification has no impact on the consumer’s
credit and results in a highly personalized process.
For those who are offered a credit product, there’s
an increased likelihood of approval once they
apply. For those who can’t receive a credit offer,
they can still come away with a valuable banking
product that will help them grow in their financial life.
A recent study3 found that consumers are willing to be approached by their bank to learn about
different products and services, yet the perception is that banks are slow to do so. This strategy is also
growth-centric, laying the groundwork for ongoing engagement with satisfied customers who are
waiting to hear from you.
SUCCESSFUL ONLINE ACQUISITIONS IN PRACTICE
E
arly adoption of this kind of strategy by the auto industry and progressive lenders
is proving successful. They’re providing consumers with an opt-in credit evaluation
embedded in online banner ads.
Similar to direct marketing, the process begins
with profiling and targeting a segment using robust
demographic and lifestyle data and attributes. For
example, you can target males between 30 and 50 with
an income of more than $50,000 a year who have a dog,
a child and a tablet computer; have a VantageScore®
ranging from 750 to 800; and live in a single-family
home that was purchased a year ago.
The next step includes development of banner ads and
content that resonates with your target audience. Don’t
forget high-profile sites as part of your ad placement
strategy because they are effective in sourcing new
accounts. And be sure to include overt messaging
reminding consumers that this personalization process
will have no impact on their credit and that their offers
will be tailored specifically to them. Put the consumer in
the driver’s seat.
BAI research study, 2012
3
4
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This consumer segment is identified with an anonymous ID and matched to a giant cookie
pool to target prospects online. A prequalification step pairs that anonymous prospect
with options tailored to their needs and credit profile. This process is completely consumer
consent-based and provides access to credit reports and scores to find the best credit fit
before making a firm offer of credit. This approach differs from the norm in that it evaluates
the individual’s consumer credit risk without a lengthy application and has no impact to his
or her credit score.
This brand of real-time consent results in:
• Process completion rates of up to 40 percent
• Improved take rates of 15 percent to 60 percent (consumers
take one or more prequalified options)
• Improved approval rates, since all consumers are prequalified
prior to applying
• Better consumer experience overall
FOUR STEPS TO OPTIMIZING YOUR ACQUISITION FRAMEWORK
The framework for each lender’s customer empowerment process revolves around these four steps.
But testing is always required to ensure that media optimization, ad messaging, and the positioning
of credit and noncredit options results in obtaining the desired end customer.
Web media plan
• Identify target population
• Develop media buy strategy
• Optimize ad placement
Embed credit screening
• Empower consumers to select the best fit
Down-sell strategy
Determine soft decline method
• Checking account
• Credit education
Review and enhance
• Develop “give to get” messaging
• Cross-sell opportunities
• Keep offers competitive
5
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THE NEXT EVOLUTION:
INCREASE ROI AND EARN
CONSUMER TRUST
The timing has never been better. The data is
available, the technology is only getting better
and consumers are yearning for a trusted,
long-term relationship with a provider that
handles one of their most important daily basic
needs — their finances. Building loyalty and
trust is a two-way relationship. Progressive
FIs are learning what it means to be loyal to
their customers in brand-new ways. The focus
on customer experience, empowerment and
transparency is paramount to building loyalty.
In turn, FIs are realizing higher activation and
usage rates that fuel portfolio growth.
Consumers in the multidimensional and complex
online channel have increasingly little appetite
for trial and error. This is the time to adhere to
a proven framework for the next evolution in a
powerful online acquisition strategy.
Experian is the leading global information services company,
providing data and analytical tools to clients around the
world. We help businesses to manage credit risk, prevent
fraud, target marketing offers and automate decision making.
Experian supports clients across many different markets,
including financial services, retail, telecommunications,
Contributing authors:
Beverly Henderson | Experian Product Marketing
Reshma Peck | Experian Strategic Marketing
Kara Stewart | Experian Digital Marketing
automotive, insurance and the public sector.
Experian’s Prequalification is a powerful, consent-based
credit-screening tool that allows you to prequalify consumers
for credit in real time at the point of contact, without a firm
offer of credit. This tool gives you access to individual credit
data, empowering you to proactively match consumers to
the products that best fit their needs and credit profile. And
because Prequalification is a soft inquiry, it will never affect
the consumer’s credit score.
Contact us to learn how Experian’s industry-leading credit
and marketing information, expert analytics and consulting
can help you identify profitable new customers, segment
existing customers according to risk and opportunity,
manage loan portfolios, and undertake effective collections
© 2013 Experian Information Solutions, Inc. • All rights reserved
Experian and the Experian marks used herein are service marks
or registered trademarks of Experian Information Solutions, Inc.
Other product and company names mentioned herein are the
property of their respective owners.
VantageScore® is a registered trademark of VantageScore
Solutions, LLC.
07/13 • 6745-CS
actions while protecting by detecting and preventing fraud.
1 888 380 6198 | www.experian.com/prequalification